Letter 63: Building A Strategic Plan
Determining your goals, your risk tolerance, and your time availability
For those who weren’t aware, I’ve been AFK for the last 3.5 weeks. I spent the time almost entirely offline, traveling around Japan on my honeymoon. It was fun! Glorious, really. Trip of a lifetime. But, like all good things, it had to come to an end, and now it’s time to settle back in to reality.
Before I left, I pre-wrote seven posts which is why this Newsletter ran mostly-as-usual for the last few weeks. I’ve been thinking about what to write about this week now that I’m back, and the thing that keeps coming to mind is the importance of having a strategy, mostly because, well, I have been spending a lot of time thinking about what to do with my own portfolio as I return home.
The markets have had a pretty spectacular rise while I’ve been away — especially over the last week or so — and any time that happens I like to take stock of my portfolio and do some rebalancing and reallocating. Rather than sit down and think through the minutiae of every single decision, I now largely rely on doing things by gut instinct and by doing things that feel directionally correct. Part of why I am able to do this is of course the experience that has come from doing this for years and years.
But another big part is that I have previously taken the time to sit down and think through my strategy. A strategy that I have written down, and that I treat as my North Star.
So this week I am going to talk through the process I went through in developing my strategy, and sharing it in a way that is hopefully replicable by anyone else trying to create their own strategy.
Sidenote but I also have a couple of mega posts lined up to come out soon in future weeks: one is an ultimate guide to alpha, and another is an ultimate guide to crypto security, so keep an eye out for them. I think they’ll both be super value packed.
But I digress; let’s get back to talking strategy.
Creating Your Strategy
Far too many people haphazardly find themselves in the crypto space without taking the time to write out a strategy or have any clear goals for what they’re trying to achieve. There might be an abstract idea like “to make money” or “to get rich” or “to quit my job” or “to experiment with new technology” or whatever, but rarely does someone actually sit and write down their plan or goals for being in crypto.
It truly doesn’t take long to create your strategy, and I am convinced it will have the longest and most positive impact on your journey in terms of the time you put in compared to the value you’ll receive from it.
Something which makes this difficult to write about though is that everyone is different, so there is no one-size-fits-all approach to give here. Everyone is going to (rightfully) have a different plan and strategy; so I can’t tell you exactly what to do. But I am here to help guide you so that you can figure it out for yourself and your own unique situation.
If you’re a parent with a full time job and 3 kids, you’re not going to have 60 hours a week to gamble in the crypto casino and would almost certainly want a hands-off, low-risk, approach.
If you’re a 19 year old, still living at home, with a part time job, and a lot of disposable income, and a high risk tolerance - you might want to take an approach where you’re spending every waking minute trying to maximize your opportunities in the space and knowing that even if you lose it all, your ability to bounce back and start again is not destroyed and you’ll still have a roof over your head and food on the table.
There are 3 key components to formulating your strategy:
Your Goal(s)
Your Risk Tolerance
Your Time Availability
We’re going to look at them one by one with an action step to take at each stage, and then put it all together to come up with your overall strategy and plan.